Hechinger raises number of shares in stock offering

June 15, 1991|By Cindy Harper-Evans

Landover-based Hechinger Co. said yesterday that it has increased the offering of common stock it announced two weeks ago from 3.5 million shares to 5 million shares in an effort to raise $60 million and speed up expansion plans and the extension of its Home Project Center format to other Hechinger stores.

An underwriting group managed by Morgan Stanley & Co. yesterday priced Hechinger stock, which is traded-over-the-counter, at $12 a share.

Analysts contacted yesterday said that the retailer most likely decided to increase its offering of Class A common stock because there was significant interest in the issue.

"The stock is at a very attractive price," said Budd Bugatch, a home improvement analyst with Ferris, Baker Watts in Baltimore. "People are probably buying it up quickly, and Hechinger said, 'As long as the interest is high, we may as well sell.' "

Hechinger officials would not comment yesterday beyond the news release announcing the increased offering. "We are in a quiet period and have been told [by the Security and Exchange Commission] not to say anything until next week," President John W. Hechinger Jr said.

Hechinger stock closed at $12.50, up 37 1/2 cents, yesterday.

The net proceeds from the offering, combined with existing and internally generated funds, will be used in part to turn existing Hechinger stores into Home Project Centers. The two stores that already have been made into Home Project Centers are in Glen Burnie.

The remainder of the money will be used for Hechinger's warehouse-style Home Quarters stores, which are being used as an expansion vehicle outside of the Baltimore-Washington market.

The increased attention to both these concepts comes at a time when competition from other home improvement chains, most notably Atlanta-based Home Depot, is heating up in Hechinger's core markets.

Hechinger currently operates 85 stores, 28 Home Quarters Warehouse stores and six Triangle Building Centers in 15 states and the Washington area.